US Treasury yields rose on Friday, with 10-year yields bouncing from a one-week low, as Wall Street stocks climbed on upbeat company results, offsetting worries about slowing economic growth and the US-China trade conflict. A looming supply of Treasuries next week together with caution ahead of the Federal Reserve's policy meeting and the government's payrolls report added upward pressure on bond yields.
Concerns about the government shutdown's impact on the economy simmered down after US President Donald Trump said a deal had been reached with lawmakers that would reopen the government through February 15. "The market is getting its cue from the equity market," said Subadra Rajappa, head of US rates strategy at SG Corporate & Investment Banking in New York.
The yield on benchmark 10-year Treasury notes was 4.3 basis points higher at 2.755 percent. It hit a one-week low of 2.700 percent on Thursday. Two-year Treasury yields, which are particularly sensitive to traders' views on Fed policy, were up 4.2 basis points at 2.604 percent. The S&P 500 was up 0.9 percent, while the Dow was 0.8 percent higher and the Nasdaq rose 1.3 percent.
Despite worries about trade and growth, longer-dated Treasuries are expensive as more supply is expected to fund the tax cut enacted in December 2016 and the federal spending deal reached last February, said Jerry Paul, senior vice president of fixed income at ICON Advisers in Denver. The Treasury Department will sell a combined $113 billion in two-year, five-year and seven-year fixed-rate securities, the same amount it auctioned in December. It also will sell $20 billion in two-year floating-rate notes next week, up from $18 billion auctioned last month.